It is true that Benjamin Franklin wrote about the two certainties in life (death and taxes), but he probably borrowed the phrase from Christopher Bullock, who wrote n 1716 “Tis impossible to be sure of any thing but Death and Taxes.” While the former is true for all, the latter is particularly true for an American expat.
The US of A is one of a handful of countries which tax your income regardless where you live; others are North Korea, Libya, Eritrea…how many expats do they have? Nearly all Americans face an annual deadline of April 15th, while expats can receive an automatic two month extension. But the taxes (and the interest, and the penalties) all must still be paid.
If you’re earning income from a foreign source as an expat, there is a sizable exclusion, and you can (depending on reciprocity with the country where you live) get credit for foreign taxes paid on your US tax return. If you have a foreign bank or investment account, there is the requirement to notify the Treasury of that account if it (or any combination of assets) exceeds $10,000 USD at any time. That is colloquially called FBAR, an acronym referring to the law which sought to eliminate offshore banking as a means of hiding income. Oh, and if you receive interest on such instruments, there is (of course) another law (FATCA) which the IRS uses to ensure foreign banks report back to them on you!
All this before even considering state taxes. Many expats don’t realize it, but even if you leave to be an expat and never plan to–or just never do–return, you have a US domicile for tax purposes. This is the place you would intend to return IF you ever did: it can be where you left from, where you established residence before you left, where you vote, etc. Your domicile determines whether you owe any state taxes (remember, your federal taxes are a given).
It is true that if you have no property in the US, no connections to same (voting registration, driver’s license), no taxable income, no intent to return, and no real goods that require a will for probate, you may not need to worry about your tax domicile. Yet I know some expats who do have these things, yet think they will somehow escape. Remember, death & taxes!
State governments watch for citizens who receive income in their state but don’t file a return, or who once filed a return and then years later their heirs try to probate a will. Some states will try to claim back taxes and penalties, so be wary.
It is true that some expats fall under the radar and simply go along, not paying taxes, not filing forms, and never get caught. But like so many things, expat taxes are a complicated subject, and one you ignore at your peril. By the way, tax deadline is tomorrow!